Nigeria’s external reserves are projected to fall below $45 Billion at the end of September, the lowest in six months. Last week, the reserves maintained downward trend for eight consecutive weeks, dropping below the $46 Billion for the first time in five months. Naira Data from the Central Bank of Nigeria (CBN) showed that the reserves fell last week by $292 Million to $45.874 Billion on Thursday from $46.166 Billion Thursday of the previous week.
Financial Vanguard analysis revealed that the external reserves had declined persistently by $1.92 Billion since July 5, 2018 when it peaked at $47.798 Billion, implying average weekly decline of $240 Million. Further analysis revealed that the reserves fell by $1.245 Billion in August. The persistent decline is driven by outflow of Dollars by foreign portfolio investors exiting the Nation’s debt market and increased Dollar supply by the CBN in a bid to stabilise the Naira exchange rate in the face of increased demand for Dollars.
With the Apex Bank expected to continue to maintain weekly Dollar injection to defend the Naira, Financial Vanguard analysis projects the reserves will maintain weekly decline in September. Hence the reserves are projected to drop by $962 Million to $44.91 Billion at the end of the month.
Meanwhile, the Naira depreciated in the parallel market and in the Investors and Exporters (I&E) window last week even as volume of Dollars traded in the window rose by 68 percent. The Naira depreciated by 70 kobo in the parallel market and by 29 kobo in the I&E window. According to naijabdcs.com, the live exchange rate platform of the Association of Bureaux De Change Operators (ABCON), the parallel market exchange rate rose to N359 per Dollar last week from N358.3 per Dollar the previous week translating to 70 kobo depreciation for the Naira.
Data by the FMDQ showed that the indicative exchange rate for the I&E window rose to N362.64 per Dollar last week from N362.35 per Dollar the previous week indicating 29 kobo depreciation for the Naira However, the volume of Dollars traded in the window rose by 48 percent last week to $1.42 Billion from $840.56 Million the previous week. Last week the CBN maintained its weekly injection of $210 Million in the interbank foreign exchange market, allocating $100 Million to the wholesale segment, $55 Million to the SME segment and $55 Million to invisible transactions.
Read more at: https://www.vanguardngr.com/2018/09/external-reserves-to-drop-below-45bn-in-sept/
